A monthly index of economic activity in a 10-state region that includes Iowa fell sharply this month to its lowest level since October 2016.
The Creighton University Rural Mainstreet Index slumped to 35.5, from 51.6 for February. March’s decline represents the largest one month fall since the survey was initiated in January 2006.
The index is based on a monthly survey of bank chief executive officers in rural areas of the region dependent on agriculture and/or energy.
“Approximately 61.3 percent of bank CEOs expect the coronavirus to produce a recession in their market area. However, almost one-third, or 32.3 percent, expect little economic impact from the coronavirus threat,” said Ernie Goss of Creighton University’s Heider College of Business, who compiles the survey.
The March Rural Mainstreet Index for Iowa fell to 31.0 from February’s 50.1. Iowa’s farmland-price index slipped to 44.6 from February’s 45.9.
Iowa’s new-hiring index for March sank to a regional low of 28.5 from February’s 47.7.
Between 2018 and 2019, total exports for the state slumped by 8.3 percent, with food and agricultural commodities representing 32.3 percent of total exports for 2019.
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Over the past two weeks the coronavirus has resulted in 47.6 percent of the bankers surveyed reporting a decline in client or customer visits. Almost one-fourth, or 23.8 percent, indicated that their bank had experienced higher loan applications resulting from the coronavirus threat.
Another 14.3 percent of banks reported an increase in staff absences due to the coronavirus.
Bankers were asked about their bank’s plan for a nationwide quarantine resulting from the coronavirus. More than half, or 54.8 percent, indicated that their bank had such a plan while 29 percent reported their bank was developing a plan.
Only 16.2 percent indicated that their bank did not have a plan, and were not developing such a plan.
Borrowing by farmers expanded this month across the 10-state region. The borrowing index rose to 66.1 from 50.0 in February.
The checking-deposit index advanced to 69.4 from February’s 60.9, while the index for certificates of deposit and other savings instruments declined to 45.2 from 50 in February.
The confidence index, which reflects bank CEO expectations for the economy six months out, plunged to 28.3 from February’s favorable and healthy 58.1.
March’s reading represented the greatest one month decline in the confidence reading since the survey was initiated in 2006.